Bank of America has $2.3 trillion in assets but $956 billion of that is made up in loans. Think those loans are valued at current market levels? The FDIC would have a challenge even breaking up one too big to fail bank.
The FDIC has a herculean challenge in confronting the too big to fail banks. There is little doubt that having institutions that are too big is part of the reason for the current systemic crisis. Yet through the last few years the solution has been to make these banks even bigger allowing their web to spread even further and deeper into the economy. The FDIC has an insolvent Deposit Insurance Fund (DIF) backing up $13 trillion in banking assets. And what the banks call assets is simply stunning. Bank of America for example has $2.3 trillion in assets (or a larger amount than the annual GDP of California). Yet 41 percent of the assets are backed by loans, predominately real estate loans.
What does it take to be middle class in America today? Living on $50,000 per year in America.
Is it possible to live a middle class lifestyle in America with a household income of $50,000? The recent Census survey puts the median household income at $50,000 for American households. So technically speaking, this is the middle class. Yet what we think of a middle class lifestyle including affordable public colleges, accessible healthcare, and affordable housing keeps getting further out of reach for most Americans. Part of this has to do with the slow systematic destruction of the U.S. dollar. Most in the public did not notice this shift since it has occurred in very slow methodical stages. We can find the first roots of this reversal of fortune in the 1970s but the latest credit bubble has really highlighted the struggle for most middle class Americans. Owning a home with no equity is renting with a massive debt liability. Most articles don’t make the attempt to run the budget for a household at this level. With new Census data I wanted to run the household numbers for a hypothetical family living in California.
The status of the working and middle class American worker for fall 2010 – 42 percent of unemployed persons had been jobless for 27 weeks or more. Young workers have the highest unemployment rate on record at 19.1 percent.
There can be no sustained recovery without putting Americans back to work. We live in an odd time where GDP can be going up while middle class America is slowly dismantled. Let us be clear that the employment situation hasn’t improved. The recent job gains are largely part of the Census hiring that is now coming to an end. The housing market is still seeing record amount of foreclosures, bankruptcies are on the rise, yet banks are somehow turning profits. If we look at the length of unemployment for displaced workers we realize that our economy is undergoing a fundamental shift. Working and middle class Americans will have a harder time achieving and staying in the middle class than only one generation ago. Let us first examine the persistent issue of long-term unemployment:
The housing documents mess – Why banks are carelessly rushing foreclosures in Florida and not in California. Mortgage foreclosure deficiency judgments.
In the last few weeks the issue has come to the table that in some states, in particular Florida, banks are rushing through the foreclosure process so quickly that they have mismanaged the paperwork process. Apparently the same forged paperwork that got people with very little income into highly leveraged properties is now working in reverse. This is a critical issue because housing is the most vital asset for the average American in their net worth profile. Banks might like to believe that they can just automate our judicial system but that isn’t exactly how it works. One major issue that isn’t being covered is why are banks so eager to foreclose in Florida but not in California? The answer is because of mortgage foreclosure deficiency judgments. Read More